MAG Silver Corp. (MAG:TSX; MAG:NYSE American) and joint venture (JV) partner Fresnillo began precommissioning of their Juanicipio plant, which should "mitigate capital costs" before the next two milestones, reported H.C. Wainwright & Co. analyst Heiko Ihle in an Oct. 29 research note.
"Revenues from this production should ultimately provide the necessary capital to offset the project's cash requirements, thereby de-risking the plant commissioning and ramp-up phases expected by the end of 2021," Ihle wrote.
MAG is well on its way to its next Juanicipio catalysts. By year-end, the new plant is expected to hit 40–50% of its 4,000 tons per day nameplate production capacity and then sometime in 2022, achieve 90–95%.
"We currently do not anticipate any meaningful delays to this timeline," Ihle commented. He pointed out that this schedule is "significantly faster than the initial three-year timeline to reach full capacity that was given in the 2017 preliminary economic assessment."
He also noted the JV continues to utilize Fresnillo's nearby plant to process all Juanicipio mineralized development material.
"We highlight that the (silver rich) lead and zinc concentrates are currently treated at market terms under offtake agreements with Met-Mex Peñoles, S.A. de C.V. (private)," Ihle wrote.
The analyst also reported the Q3/21 production numbers from Juanicipio. The mine generated 57,127 tons of development material, 29% more than it did in Q2/21.
The JV's Q3/21 metals production, on a 100% basis, amounted to 667,532 ounces (667,532 oz) of silver, 53% more quarter over quarter (QOQ), and 1,107 oz of gold, 41% higher QOQ. MAG's portion amounted to 293,714 oz of silver and 487 oz of gold.
Ihle mentioned upcoming catalysts for MAG's stock. One is market clarity on the company's potential profitability once Juanicipio achieves commercial production. Another is additional drill results from MAG's Deer Trail project.
H.C. Wainwright & Co. has a Buy rating and a $22.50 per share target price on MAG Silver, the stock of which is currently trading at about $19.78 per share.
Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Important Disclaimers From H.C. WAINWRIGHT & CO, LLC, MAG Silver Corp,. Oct. 29, 2021
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I, Heiko F. Ihle, CFA and Marcus Giannini , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of MAG Silver Corp (including, without limitation, any option, right, warrant, future, long or short position).
As of September 30, 2021 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of MAG Silver Corp.
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The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from MAG Silver Corp for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
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